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Dept Advice

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Ken
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Dept Advice  Reply with quote  

Hello looking for some financial advice. My Current Situation
Annual Income Gross $81850 a year (Not counting rental home) Possible (Extra 800-900) a month
Current Debt not counting regular bills like food, gas, etc
Current home- $206.000 Payment A month 1352.7
Rental Property Owe $85,395.09 - Purchase price was 107K in 2009
Car - $14,550.26 Payment is $272 a month
Credit Card -$7,497

We used to have renters in the house but they recently moved out next mortgage payment isn’t till March and is around $600. We are about to list the house for 115K. Should I keep it or rent it? I would really like to get out of dept and I am making more money now they I have been in the past hence the dept. The house is not in the same state as us so I would love to get rid of the stress of not having it if we can afford to. Any Advice would help?
Post Thu Dec 29, 2016 5:27 pm
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oldguy
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Location: arizona
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quote:
Rental Property Owe $85,395.09 - Purchase price was 107K in 2009


If you list/ask $115k, the offers will probably be in the $100k to $105k range. The realtor commission will be $6000. $95k minus the loan payoff will be about $9500 net.
At tax time, you will have a $12,000 capital loss ($107k minus $95k) that you can subtract from your income. But you will also have a depreciation recapture cost to pay at tax time.

Depending on the region/location it might be a keeper. (Eg, if it's close to a military base, the source of tenants is good - if close to a college, not so good). And the Property Manager makes a big difference - usually they have a waiting list of vetted tenants - so almost no vacancies, vetted tenants so very few dead-beats, etc. (You now have a vacancy so maybe there is a PM issue?)
Or you may have violated the First Law of Landlording - "never rent to a coworker, an acquaintance, a friend, and never ever to a relative, you need a formal arms length agreement with a STRANGER"

The $800 to $900/m income covers the $600/m payment - and the depreciation offset adds another $75/m to the rental income.
Post Thu Dec 29, 2016 7:20 pm
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Ken
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" Or you may have violated the First Law of Landlording - "never rent to a coworker, an acquaintance, a friend, and never ever to a relative, you need a formal arms length agreement with a STRANGER"

Yes that's what we did with the last renters and they stayed for 3-4 years but I would never do again. They eventually would pay the rent but the stress of it wasn't worth it... At the time we needed to move because I found a Higher paying job 1000 miles away. It is near a college and Military base but not sure I would want to rent just because of the stress of it.. I know long term its a good investment but I also want to live life with a little less stress and out of Debt.
Post Thu Dec 29, 2016 8:32 pm
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oldguy
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quote:
and Military base but not sure I would want to rent just because of the stress of it.


For several years (until the Base closed), I posted my rental houses with a Military Base. The military families were my best renters. All I needed was the name/phone of their Commanding Officer - if there was any troubles such as collections, damage, etc, a call from me would put their Off-Base status on hold. I never any troubles, the houses were left spotless - and I returned the security deposits 100% every time. One time a military wife said she didn't have time to clean the oven and asked me to keep $50. The house was spotless, I gave her the full deposit.
Post Thu Dec 29, 2016 9:07 pm
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Ken
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I think what I am going to do is post it for sale till March. It is a sellers Market in the location so it might sell fast and from looking at other sales people have not been asking for much off on the other houses. If it dont sell by then I will go with a property Manager... I dont think I would see many renters in Jan or Feb anyways..
Post Fri Dec 30, 2016 12:29 am
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